PAL DIAGNOSTIC TEST ( ACCOUNTING )

Which of the following is NOT a step in the accounting process?

• Identification.

• Economic entity

• Recording

• Communication

The historical cost principle states that:

• Assets should be initially recorded at cost and adjusted when the fair value changes.

• Activities of an entity are to kept separate and distinct from its owner.

• Assets should be recorded at their cost

• Only transaction data capable of being expressed in terms of money be included in the accounting records.

Net income will result during a time period when:

• Assets exceed liabilities.

• Assets exceed revenues.

• Expenses exceed revenues.

• Revenues exceed expenses.

Performing services on account will have the following effects on the components of the basic accounting equation:

• Increase assets and decrease owner’s equity.

• Increase assets and Increase owner’s equity.

• Increase assets and Increase liabilities.

• Increase liabilities and Increase owner’s equity.

Which of the following events is not recorded in the accounting records?

• Equipment is purchased on account.

• An employee is terminated.

• A cash investment is made into the business.

• The owner withdraws cash for personal use.

During 2019, Amir Catering’s assets decreased RM50,000 and its liabilities decreased RM50,000. Its owner’s equity therefore:

• Increased RM50,000.

• Decreased RM50,000.

• Decreased RM100,000.

• Did not change.

Which of the following statements is FALSE?

• A statement of cash flows summarizes information about cash inflows(receipt) and outflows(payments) for a specific period time

• A statement of financial position reports the assets, liabilities and owner’s equity at specific date.

• An income statement presents the revenues, expenses, changes in owner’s equity, and resulting net income or net loss for specific period of time.

• An owner’s equity statement summarizes the changes in owner’s equity for specific period of time.

Unearned revenues are

• cash received and a liability recorded before services are performed.

• revenue for services performed and recorded as liabilities before they are received.

• revenue for services performed but not yet received in cash or recorded.

• revenue for services performed and already received in cash and recorded

Which of the following statements is true?

• Debits increase assets and increase liabilities.

• Credits decrease assets and decrease liabilities.

• Credits decrease assets and increase liabilities.

• Debits decrease liabilities and decrease assets.

MGolito purchased equipment for RM2,300 cash. As a result of this event,

• owner’s equity decreased by RM2,300.

• total assets increased by RM2,300.

• total assets remained unchanged.

• owner’s equity decreased and total assets increased by RM2,300